عوامل مالی پول نقد شرکت های بزرگ: شواهدی از برخی از بازارهای نوظهور

This paper investigates corporate cash holdings in developing countries. In particular, we look into the effect of capital structure and dividend policy on cash holdings in Brazil, Russia, India, and China and compare our results with a control sample from the US and the UK. Our sample contains 1992 firms across these countries for the period 2002–2008. We employ Instrumental Variables analysis to control for the endogeneity of the financial policies (cash holdings, capital structure, and dividend policy). Our results show some evidence that capital structure and dividend policy affect cash holdings. There are similarities between developed and developing countries on the factors determining corporate cash holdings. The results of our cross-country model provide evidence that capital structure, dividend policy, and firm size are important factors in determining cash holdings. Finally, we show that firms operating in countries with low shareholder protection hold more cash.

Ever since Opler, Pinkowitz, Stulz, and Williamson (1999) investigated the determinants of cash holdings, there has been growing interest in explaining why firms hold cash. In the UK context, Al-Najjar and Belghitar (2011) find that cash represents, on average, 9% of the total assets. Dittmar and Mahrt-Smith (2007), using US data, find that around 13% of total assets are cash and near-cash assets. Thus, cash represents a sizeable asset for firms. The determinants of cash holding deserve investigation because cash holding has costs. Firms might hold cash to meet future contingencies but meanwhile, they may not invest in profitable projects, with positive NPV. High levels of cash may therefore indicate agency problems between firms’ management and shareholders (Jensen, 1986). Another important cost of holding cash is the opportunity cost if firms are trading off their profitable projects to hold it. According to Scott (1995), institutional factors are cognitive, normative and regulative structures that may affect firm's financial practices such as cash holdings. One of these factors is the socio-economic factor including laws, and actor's attitudes which is considered to be weak in many emerging markets relative to that in developed markets such as the US (North, 1990 and North, 2005). This is likely to raise the level of uncertainty in transactions and consequently encourage a range of unproductive practices such as cash retention. Further, slow institutional development (i.e., stock market, bank, and other financial institutions) may motivate firms to adopt conservative financial practices (North, 2005). On the other hand, financial globalization driven by the International Financial Institutions has generated a consensus around the need to raise levels of confidence in transactions in the developing world and a tendency to adopt Anglo-Saxon conventions in this area (Kose et al., 2006). Thus, conflicting tendencies exist: national ‘path dependency’ and in international trend to institutional homogeneity. In this paper, we examine actual firm practice, which may reflect the influence of institutions in national settings but may equally be conditioned by global financialization and its institutional drivers. We contribute to the literature by investigating the financial determinants of corporate cash holdings in developing countries, namely Brazil, Russia, India, and China, and compare the results with those based on developed markets: the UK and the US. This allows us to explore corporate cash holdings across countries with different institutional frameworks. We employ both country specific analysis and static panel data estimations. We control for the endogeneity between capital structure, dividend policy and cash holdings. We use a different set of factors that can affect cash holdings for an updated period of time (2002–2008). Consequently, in this paper we shed more light on developing countries and then we develop a cross-country model to capture the financial determinants of cash holdings. To the best of our knowledge, this paper is among the first to concentrate on emerging markets (Brazil, Russia, India, and China). To do so, we use a large sample of 1212 non-financial firms listed in these countries. The results of our analysis indicate that leverage, dividend payout, liquidity, profitability, and firm size impact cash holdings. We examine a cross sectional-time series model across the investigated countries and report that there are country effects on corporate cash holdings decision. The results of the cross-country model show that leverage, dividend payout ratios, and firm size affect cash holdings. The remainder of this paper is organized as follows: Section 2 discuses the theoretical framework; Section 3 develops the hypotheses; Section 4 explains data and methodology; Section 5 highlights the results; Section 6 provides a common model for cash holdings, Section 7 demonstrates further analysis, and finally Section 8 concludes the study.

In this study, we investigate cash holdings in emerging markets that are different in governance and institutional framework from the US and the UK. When we combine both country and cross-country analyses about cash holdings, we gain more understanding about the debate of why firms hold cash. Furthermore, investigating this debate in emerging markets emphasizes the importance of the strategic decision of holding cash, which has been under-researched or partially explored in the previous literature. Accordingly, our main aim in this study is to provide new evidence on the financial determinants of cash holdings in emerging markets. The sample includes non-financial firms from Brazil, Russia, India, and China, which represent the biggest emerging markets as they are among the top 20 countries in terms of the GDP. Our results provide further insights into the decision of holding cash from international context. We detect that for both developed and emerging market firms, leverage, dividend payout, liquidity, profitability, and firm size impact cash holdings. It is worth noting that these results might be subject of scepticisms, since some of the independent variables have changed in significance across the countries, and some have an overall low impact. This is expected because these countries have different institutional settings. Booth et al. (2001) reach to a similar result when they investigate capital structure in developing countries. Booth et al. (2001) and Aivazian and Booth (2003) use India in their sample. Dittmar et al. (2003) examine Brazil, as well as India, and Ramirez and Tadesse (2009) use Brazil, Russia, India, and China in their sample when they investigate cash holdings. Their results show some evidence that financial theory is applicable in international contexts. Hence, our results are comparable to those reported in the previous literature and provide further insights about the financial determinants of cash holdings across countries. We adopt a uniform model for developed and developing countries to capture the impact of firm-driven factors. The cross sectional-time series model shows that the investigated financial factors affect cash holdings. In particular, leverage, dividends and firm size are found to be important financial determinants of cash holdings. The industrial and institutional settings are the main reasons behind the differences in cash holding decisions across our sample. In order to further investigate this issue, we run additional analysis and provide supporting evidence that, from emerging markets context, firms operating in countries with low shareholder protection hold more cash. One reason is that such countries have weak capital markets for firms to approach for funding. Overall, we provide further evidence that trade-off theory, pecking order theory and agency cost theory play important roles in understanding financial decisions such as cash holdings in developing countries. Our results show that the factors determining cash holdings in both emerging markets and more developed countries are largely similar. In particular, leverage, dividend payout, profitability, asset liquidity, and firm size have an impact on cash holdings. In general, from international perspective, this study has an important implication since it shows that even if emerging markets differ in financial and governance structures yet they share the same financial determinants. Hence, firms in such countries follow almost similar patterns in managing their cash holdings. There is still room for further discussion about corporate cash holdings in developing countries by investigating the internal corporate governance factors that might impact financial decisions. Board characteristics, audit features, and CEO characteristics all require investigation.